Intel-McAfee Deal Could Get EU OK Next Week: Reports

By Jeffrey Burt |
Posted 2011-01-21

European approval of Intel's $7.68 billion acquisition of security software
vendor McAfee could come as early as next week, according to published reports.

The
giant chip maker, which earlier this month made
several concessions to ease European regulator antitrust concerns, offered
even more changes, according to reports from Reuters and the Wall
Street Journal. The deal already has gotten approval from the U.S. Federal
Trade Commission.

Quoting
unnamed sources, the news organizations reported that Intel officials had
offered more concessions after McAfee rivals were unswayed about the first
round of remedies. According
to a Reuters source, a key part of the Intel concessions is ensuring that products
from other software vendors will run without restrictions on Intel products.

McAfee
is the world's second-largest security software vendor behind Symantec, and
competitors worry that if Intel buys McAfee, it could create an unfair
advantage for McAfee technology, given the wide reach of Intel's processor
business. Intel controls more than 80 percent of the world's processor market.

The
worry is that once the deal is closed, Intel may build security features in the
chips that only McAfee software could take advantage of. Such concerns echo
what the FTC and other U.S.
regulators said in lawsuits filed last year against Intel. In those suits-the
FTC and Intel have since settled their legal dispute-the regulators said that
Intel had made changes to some of its technologies, such as compilers, so that
products from rivals such as Advanced Micro Devices would not work as well with
them.

The
chip maker is looking to integrate more security capabilities onto its chips,
which officials have said will make it more difficult for hackers to attack
devices. In addition, the security software will run more quickly once it's
housed directly on the processor, they said.

Such
on-chip security capabilities will become an increasing focus for Intel as it
continues to push its products into the mobile world of Internet-connected
devices, such as smartphones and tablets. Intel is looking to expand beyond its
core PC and server chip businesses into other markets, including mobile devices
and embedded applications. The McAfee acquisition will be a key part of that
move, officials have said, as will Intel's proposed $1.4 billion acquisition of
Infineon's wireless technology unit.

Intel
intends to run McAfee as a separate business, with current McAfee CEO
Dave DeWalt heading up the business. McAfee also will continue to sell its
software to other companies. Speaking to analysts and reporters during a Jan.
13 conference call to announce Intel's quarterly earnings, CEO
Paul Otellini said he still expects the McAfee deal to close soon, possibly as
early as the first quarter, if the European Commission's concerns are met.

The
EC-the antitrust arm of the European Union-earlier this month extended the
deadline for a decision on the deal by two weeks, to Jan. 26.

Intel
over the past few years has had its share of run-ins with U.S.
and European regulators, who have accused Intel of anti-competitive behavior by
offering OEMs price breaks and rebates to limit their use of AMD
products. Intel executives have denied the claim, saying that while their
business practices are aggressive, they are not illegal. Intel has settled most
of the legal claims against it, without admitting any wrongdoing.